Systems and method for improving investment performance

ABSTRACT

Methods for a data processor implemented system monitor for enabling persons to turn over the allocation of their investment assets, and/or receive assistance concerning how to receive disbursements from investments, in a manner that is free from or ameliorates the traditional conflicts of interest in previous systems. The systems and methods are adapted to ameliorate the tension between other functions where the compensation may be affected by asset allocation. The systems and methods collect, monitor, and direct information from persons who hold indicative data, e.g., employers, to provide professional asset allocation services, including automatic allocation, rebalancing, and reallocation of investment assets, on a regular basis; as well as assistance in determining how much to save or how to receive disbursements in a manner that ameliorates conflicts of interest, which, in the case of employee benefit plans, is consistent with the regulatory restraints of ERISA.

RELATED APPLICATIONS

This application is a Divisional of U.S. patent application Ser. No.10/073,632, filed Feb. 11, 2002, now U.S. Pat. No. 7,120,600, whichclaims priority benefit of U.S. Provisional Application No. 60/349,162,filed Jan. 16, 2002, of U.S. Provisional Application No. 60/349,459,filed Jan. 18, 2002, and of U.S. Provisional Application No. 60/267,771filed Feb. 9, 2001, and is generally related to U.S. Pat. No. 6,154,732,issued Nov. 28, 2000, the contents of each of which is incorporatedherein by reference.

BACKGROUND OF THE DISCLOSURE

The present disclosure relates generally to an innovative investmentprogram, which is designed to improve investment performance forinvestors, including participants in Benefit Plans, by automaticallydetermining appropriate savings levels and automatically allocating,rebalancing and reallocating investment assets (which generally includetaxable and tax-deferred assets, and may include assets in BenefitPlans, once an investor so directs or in cases where a third party candirect on behalf of the investor, without receiving direction from theinvestor) for investors, while eliminating or, at least, amelioratingthe conflict of interest that would otherwise exist between a providerof automatic allocation services and persons (e.g., money managers,registered investment advisors, etc.) that would normally benefit fromsuch automatic services. The innovative investment program includes, butis not limited to, systems and methods that are computer housed softwareprograms for collecting, monitoring and directing data from persons, whohold investors' indicative data, including, but not limited to, sponsorsof pension plans, money managers, and affiliates of such persons.

The field of individual savings, including retirement savings, has beengreatly impacted by the vigorous growth of the stock market andretirement plans that offer individual accounts. Both of these recentphenomena generally require the individual investor to both determinehow much to save and how to invest savings, including directing theinvestment of the assets allocated in his or her individual savingsaccount or similar account. Considering the continuing erosion oftraditional Benefit Plan pension plans (which are managed on behalf ofindividuals and, in this regard, require no action from suchindividuals), the approaching retirement of the baby-boom generation,and the growing interest in Social Security reform, effective savings,including the effective use of the Benefit Plan, as defined hereinafter,is a cornerstone of an effective retirement policy for the United Statesof America, or any other country facing the above challenges, and isbelieved will have a staggering impact on future national and statepolicy as well as future national and state budget allocation decisions.

In the case of Employee Benefit Plans (“Benefit Plans” are arrangements,including trusts or other vehicles associated with such arrangements,which hold assets generally designed to be saved until after terminationof employment, including, but not limited to, employer-sponsored 401(k)plans, and individual retirement plans and annuities and other similarplans), Benefit Plan sponsors and public policy officials have been veryconcerned about the effective “utilization” of Benefit Plans and theimplications thereof with respect to the future of at least SocialSecurity for some time. Investments in employee education, expandedinvestment choices, lifestyle funds, retirement planning software,online advice tools, etc. have all been produced with the goal ofimproving the overall national savings rates, including Benefit Planutilization (i.e., raising participation rates, generally increasingsalary deferral levels and establishing/maintaining appropriate assetallocation).

Unfortunately, the above-described methods are yet to achieve thedesired results. Despite investments in the above described methods,most individuals, including many participants in self-directed,individual account plans, do not even participate, and when mostindividuals do participate, most individuals do not appropriately saveand invest, including a failure to participate in 401(k) plans, nor dothey save sufficient amounts, as reported in O. S. Mitchell, J. F.Moore, 1998, “Can Americans Afford to Retire New Evidence on RetirementSaving Adequacy,” Journal of Risk & Insurance 65(3), 371-400, and/ormost individuals do not appropriately allocate their assets, includingassets in their retirement accounts, to adequately provide for theirfuture retirement income needs.

As is known, individual investors as opposed to institutional investorpopulations can roughly be divided into two groups as follows:

Financially “involved”: The “financially involved,” as defined in thepresent application, are believed to already be doing better than theaverage Benefit Plan participant but are generally not yet saving orallocating their saving in an optimal manner. The financially involvedpresently save in greater (and generally more appropriate) amounts andare believed to generally appreciate additional tools and informationand would apparently benefit from these and additional services, thoughnot as to the same extent as the financially uninvolved apparently wouldbenefit.

Financially “uninvolved”: The “financially uninvolved,” as defined inthe present application are believed responsible for the bulk of theinvestment shortcoming problem, as the participation of the financiallyuninvolved in employer sponsored pension or savings vehicles, (includingBenefit Plans savings) and asset allocation behavior is inconsistentwith that which would be implemented by a qualified financialprofessional. The financially uninvolved do not appreciate tools andinformation and appear to simply want to be handed a solution forretirement investing with the least amount of their personal involvementas possible.

Drastically improving the resulting problems described above (includingunder utilization of employer sponsored Benefit Plans) requires meetingthe needs of the “financially uninvolved,” which typically representswell over sixty percent (60%) of the employee population. Recent studiesindicate that, in the case of section 401(k) Employee Benefit Plans, thefinancially uninvolved group's 401 (k) participation and investmentdecisions vary tremendously with the way that the 401(k) participationand investment options are presented to the plan participants. Thefindings from these studies strongly suggest that current 401(k)Employee Benefit Plans are not optimally designed to meet the needs ofthe “financially uninvolved” segment of Employee Benefit Plan eligibleemployees.

Specifically, it is presently believed that the problems described abovefor both the financially involved and the financially uninvolved resultfrom the fact that currently, individuals are either: 1) too involved inthe process of selecting investments and frequently do so by choosinginvestments based on the recent performance of individual investmentvehicles; 2) do not save appropriate amounts to meet their goals,including retirement; or 3) more often, they feel they do not have thetime, interest, and/or expertise to make appropriate investments orstructure appropriate savings plans.

The above described individual-investor behavior is in contrast toinstitutional investors, who recognize the importance of appropriatelyfunding for future liabilities, and then determine an appropriatefunding policy and asset allocation model to best find futureliabilities, and only then select investment vehicles based on theability to implement the model allocation—thus recognizing that moneymanagement (e.g., security selection) is of secondary importance forpassive, long-term investors.

The process described above as used by individuals typically results ininadequate funding levels (low savings rates) and inappropriateinvestment including suboptimal allocations. Specifically, it ispresently believed that the problems described above for both thefinancially involved and the financially uninvolved result from the factthat, currently, the process of carrying out the necessary steps toappropriately save, as outlined above, is still too overwhelming foreven the financially involved, much less the financially uninvolved.

It is presently believed that one of the possible reasons for theinadequate savings situations, as describe above, is that saving for thefuture is typically something that is put off until tomorrow, especiallyby financially uninvolved investors and especially, by individualBenefit Plan participants in the absence of effective investmentassistance. In the case of Employee Benefit Plans lack of participationby eligible employees, it has been and is presently a persistent problemthat Benefit Plan sponsors face with the implementation of BenefitPlans. Benefit Plan sponsors are all too familiar with employees whoalways intend to enroll in the Benefit Plan, but somehow never quite getaround to submitting the authorization that will enable the Benefit Plansponsor to deduct the contributions (savings) from the employees pay ona regular basis. Various academic studies and consulting reportsindicate that somewhere between one-quarter and one-third of401(k)-eligible employees do not participate in their company-sponsored401(k) Benefit Plan. (See, for example, Poterba, Venti and Wise (1994),Andrews (1992), and Bassett, Fleming and Rodrigues (1998) for academicstudies and Fidelity Investments (1999) for a consulting report.

One of the main reasons given by individual investors fornon-participation in Benefit Plans for which they are eligible is thatthe process of optimally making a decision to start any savings plan,including participation in a 401(k) plan is complicated, as viewed bythe average potential Benefit Plan participant or eligible participant.Studies by psychologists have shown that increasing the complexity of adecision-making task leads individuals to defer making a decision or toprocrastinate and such appears to be prevalent among the averagepotential Benefit Plan participants.

It is presently believed that there are at least two sources ofcomplexity in starting any savings program, such as, for example,Benefit Plans, including making the initial decision to “opt in” as aplan participant and then making an optimal 401(k) Benefit Planinvestment allocation decision. First, the shear number of possibleinvestment allocation options to be evaluated by individual investors isenormous. Each individual investor must first choose what fraction oftheir compensation or other income to contribute (savings) to theBenefit Plan. With respect to 401(k) Benefit Plans, generally a range offrom one percent (1%) to fifteen percent (15%) of an employee'scompensation is offered as possible options. Each individual investormust then choose how to allocate their contribution (savings). In thecase of 401(k) Benefit Plans, there are between, on average, ten or moreinvestment options that are available. Outside a 401(k) Benefit Plan,the investment allocation options are, as a practical matter, unlimited.Even in most 401(k) Benefit Plans there are, quite literally, aninfinite number of investment allocation combinations available.

For the “financially uninvolved” employees, a second source ofcomplexity is learning how to evaluate the myriad of 401(k) Benefit Planinvestment allocation options that are available. For example, despitesignificant investments in employee education, studies show year afteryear that more than fifty percent (50%) of employees do not even knowwhat a “money market fund” is, much less have the knowledge tointelligently choose from among the myriad of 401(k) Benefit Planinvestment allocation options that are available.

Thus, individual investors may rationally postpone making a decision onsavings, including 401(k) Benefit Plan participation, most likelybecause the cost in time and effort of gathering the informationnecessary to make an intelligent choice from among the myriad of 401(k)Benefit Plan investment allocation options that are available may exceedthe short-term benefit from making such a decision, as viewed by largenumbers of individual investors.

Recently, some Benefit Plan sponsors have reversed the above describedretirement savings procrastination simply by using automatic enrollmentin 401(k) Benefit Plans. Under automatic enrollment, individualemployees who do not actively request to be excluded from a Benefit Planare enrolled and a default contribution deferral amount (savings) isautomatically deducted from their paycheck (usually 3% of pay) andcontributed (saved) to their 401(k) Benefit Plan. The default deferralamount is invested in a default investment vehicle, usually somethingconservative, such as, for example, a money market or other relativelystable value fund. Individual employees who do not wish to participatein the available 401(k) Benefit Plan must actively submit their electionto “opt-out” (rather than to “opt-in”) the company sponsored BenefitPlan.

Results to date of such an automatic enrollment policy show thatautomatic enrollment appears to be a “win-lose” approach to changing401(k) Benefit Plan savings behavior with the “win” aspect being thatautomatic enrollment has dramatically increases participation. Forexample, using automatic enrollment, McDonald's has managed to achieve aninety five percent (95%) enrollment, an astonishing number for alargely unskilled workforce. Participation in the 401(k) plan at J.C.Penney Co. jumped to eighty nine percent (89%) of its 257,000 employees,from the low seventy percent (low 70%), a year after the retailerlaunched its automatic enrollment participation policy. Additionally,Hewlett-Packard increased the enrollment of new workers in the company401(k) plan from under fifty percent (50%) to ninety eight percent (98%)by implementing an automatic enrollment policy.

Moreover, while automatic enrollment appears to substantially increasethe overall 401(k)-participation rate, automatic enrollment also hasanother important effect of equalizing participation rates acrossvarious demographic subgroups. The effects are largest among the groupswith the lowest participation rates under the previous regime ofaffirmative elections, particularly blacks and Hispanics, the young, andemployees with lower levels of compensation.

As the United State's personal savings rate—savings as a percentage ofdisposable income—fell to a quarterly low of about three tenths of onepercent (0.3%) in the first quarter 2000, the Internal Revenue Service(IRS) issued two rulings (Revenue Rulings 2000-8 & 2000-33) in 2000approving automatic enrollment for employees already on payrolls and forparticipants in 403(b) retirement plans for nonprofit and educationalworkers and for 457 plans for government workers.

Noting that 75 million Americans do not participate in a retirementpension plan and have little or no other retirement savings, TreasurySecretary Lawrence Summers and Labor Secretary Alexis Herman issued ajoint statement praising automatic enrollment as a “promising method ofencouraging participation by those who disproportionately have beenmissing the benefits of a regular, disciplined approach to retirementsavings. We encourage employers to consider adopting automaticenrollment.”

Beyond a genuine desire to help employees save for retirement, companieshave pragmatic reasons to offer automatic enrollment to their 401(k)Benefit Plans. Utilizing automatic enrollment has proven to be aneffective means for increasing the contribution level for non-highlycompensated employees so that these companies' 401(k) Benefit Plans meetdiscrimination tests and, thereby, allow highly compensated employees tomaximize their contributions to the companies' 401(k) Benefit Plans.

However, as is usually the case, there is always a down side. In thesituation described above, the “lose” aspect of automatic enrollmentbeing that automatic enrollment has apparently generated a tremendousamount of employee Benefit Plan participant inertia. The same inertiathat kept and continues to keep eligible employees from initiallysigning up as 401(k) Benefit Plan participants, also keeps employeesfrom taking maximum advantage of the 401(k) Benefit Plan after theemployees are automatically enrolled in the 401(k) Benefit Plan. Asubstantial percentage of 401(k) Benefit Plan participants hired underan automatic enrollment policy exhibit “default behavior”—sticking toboth the default contribution level and the default investmentallocation, both of which is usually less than optimal with respect tofuture impact on the individuals or national budgetary policy.

For example, a study conducted by Hewitt Associates and released in July2000 [See, for example, Hewitt Associates (in conjunction with HarvardUniversity and the Wharton School of the University of Pennsylvania).“Enrolling Employees in 401(k) Plan Not A Cure All looked at theparticipation and default behavior of more than 53,000 eligibleemployees hired before and after automatic enrollment was initiated attwo U.S. companies (Companies A and B) over a one to two-year period.Both companies automatically enrolled employees in conservative stablevalue funds at a two percent (2%) to a three percent (3%) percentcontribution rate. As reported in the study, more than half of theeligible employees remained at the companies' conservative defaultelections for both contribution level and investment allocation.

Further, after the automatic enrollment program was implemented, anaverage of sixty three percent (63%) of eligible employees hired underautomatic enrollment at Company A contributed at the default rate; fiftyseven percent (57%) percent invested in the default find and fifty onepercent (51%) remained at both default elections. At Company B, anaverage of sixty two percent (62%) of eligible employees participatingunder automatic enrollment contributed at the default rate; sixty sevenpercent (67%) invested in the default fund and fifty eight percent (58%)remained at both default elections.

Similarly, the Madrian and Shea (2000) study (See, for example, Madrian,Brigitte C,; Shea, Dennis F. “The Power of Suggestion: Inertia in 401(k)Participation and Savings Behavior,” NBER Working Paper No. W7682, May2000.) found that an average of seventy five percent (75%) of BenefitPlan participants hired under automatic enrollment contributed at thedefault rate of three percent (3%); eighty percent (80%) invested in thedefault money market fund and about sixty one percent (61%) did nothingto change their savings/investment behavior from the default specifiedby the plan sponsor or company if no other action was taken.

The good news for the automatic enrollment policy is that 401(k) BenefitPlan participation is much higher under the Benefit Plan automaticenrollment policy than when an affirmative election by an individualplan participant is required in order for an eligible individualemployee to actively participate in the Benefit Plan. It is believedthat the best explanation for the low participation rate of new hires,in the absence of an automatic enrollment policy, is that the decisionto participate in the Benefit Plan is complicated, which leadsindividual employees to defer making a decision and to procrastinatewith respect to making a definite decision. Utilization of an automaticenrollment policy apparently decreases the perceived complexity of the401(k) Benefit Plan participation decision by decoupling theparticipation decision from the savings and investment decision.

The bad news, however, is that roughly sixty percent (60%) of theemployees that have been automatically enrolled subsequently did nothingto increase their fairly low three percent (3%) contribution rate or toreallocate their contributions away from the default investment optionto a more individually appropriate investment or to recognize theimportance of appropriately individual funding for future liabilities,and then determine an appropriate individual funding policy and assetallocation model to best fund individually perceived future liabilities,and only then select investment vehicles based on the ability toimplement the individual model allocation—thus recognizing that moneymanagement (i.e., security selection) is of secondary importance forpassive, long-term investors. Again, complexity-induced procrastinationappears to best explain why roughly sixty percent (60%) of automaticenrollees—financially uninvolved—fail to change the initial defaultinvestment choices to more individually appropriate investment(s).

The “financially uninvolved,” it is believed, have a much greatertendency to stick with the status quo investment(s) (when one isavailable) as financial decisions become more difficult. Additionally,it is highly likely that the “financially uninvolved” view the defaultcontribution rate and investment allocation under automatic enrollmentas including an implicit approval by their employer, who sponsors theBenefit Plan, of such investment decision as being the appropriateinvestment decision for them, the specific employee. In this respect the“financially uninvolved” may be correct in that, absent an affirmativeelection, one or more plan fiduciaries (typically including in this typeof activity, the plan sponsor acting as a fiduciary) is responsibleunder the Employee Retirement Security Act of 1974 or “ERISA” (which isthe law that is generally applicable to private sector retirement plans)for the default investment allocation.

The results from an automatic Benefit Plan enrollment policy also haveimplications for the design of public policies to encourage savings thathave long term budget and budget deficit impact The above describedresults of the present automatic Benefit Plan enrollment policyimplementation strongly suggest that, if Social Security reform were toinclude the adoption of partially self-directed individual accounts, asproposed by the Bush Administration, a substantial percentage ofindividuals would end up with the default plan investments as specifiedby the Federal Government. In both cases, getting the default investmentallocation “right” will have a tremendous impact on the distribution ofretirement savings available to individual Benefit Plan participants. Ifthe default investment allocation is not optimized, citizens, ingeneral, and Benefit Plan participants in particular, will most likelyhave less retirement income, pay less tax and, as a result, createadditional financial demands and stress on the government because, as aresult of less optimum investment allocation during the life of aBenefit Plan participant, the government will collect less revenue and,thus, have less income at the same time government will most likely beexperiencing increased demand for services from persons with inadequateretirement income. In this regard, existing evidence indicates that thenegative effect caused by the increased demand for services from personswith inadequate retirement income would tend to be concentrated amongpersons who are the least advantaged members of United States society,and, as a result, the social strains resulting from such members, whohave not fared well in optimizing their investment allocation, could beexpected to increase. (See, for example, “Investment Without Education,The Disparate Impact of Women And Minorities in Self-Directed DefinedContribution Plans,” by Jane Elizabeth Zaglein published in 2001 in theEmployee Rights and Employment Policy Journal at 5 Empl. Rts. & Employ.Pol'y J. 223.)

Thus, in order to convert the present automatic Benefit Plan enrollmentpolicy from an apparent win-lose proposition to a win-win proposition, aviable way must be developed to move “financially uninvolved” employeesout of the default investment option(s) and into investment option(s)having individual appropriate contribution rates and investmentallocations without compromising the Benefit Plan sponsors' need forfreedom from any significant possibility of litigation by reason ofproviding asset allocation and savings assistance to Benefit Planemployees, which has been a considerable obstacle in the past.

Another problem that has surfaced is that Benefit Plan sponsors areincreasingly concerned that by the Benefit Plan sponsors increasing theinitial contribution rate, employees may be induced to opt-out of 401(k)Benefit Plan participation, and just as there has been and isparticipation inertia, there will be non-participant inertia as well.

The above-mentioned studies show that a majority of eligible employeeswho fail to act on deciding whether and how much to participate in aBenefit Plan will also be likely not to decide on how to optimallyinvest their contributions in an individually appropriate investmentvehicle to achieve an individually appropriate investment allocation.Under the facts outlined by IRS revenue Ruling 98-30, if a Benefit Planparticipant has made a no-investment election, then the Benefit Plan caninvest the contributions in a balanced fund that includes bothdiversified equity and fixed income investment vehicles.

Many Benefit Plan sponsors are wary of choosing default fund allocationsthat includes equities because they are concerned that the Benefit Plansponsors will be blamed if the investment returns fall or are negativeduring adverse market periods. Consequently, most automatic Benefit Planenrollments use conservative investments (e.g., money market fund* orstable value fund* as the Benefit Plan default allocation.

Additionally, IRS included a warning in IRS revenue Ruling 98-30 rulingthat the Department of Labor will not consider the Benefit Planparticipant or beneficiary to have exercised the type of control overBenefit Plan investment choices that is necessary to justify relaxingfiduciary responsibilities in the ERISA section 404(c) Benefit Planregulations. In this case, the fact that the Benefit Plan participant orbeneficiary is merely told of the Benefit Plan investments that will, inthe absence of instructions to the contrary, be made on his or herbehalf cannot be considered control of the Benefit Plan investmentdecision by the Benefit Plan participant. Therefore, other Benefit Planfiduciaries will not be relieved of responsibility for the results ofthe Benefit Plan investment by reason of ERISA section 404(c).

Finally, as noted above, many employees consider the Benefit Plandefault investment as affirmative Benefit Plan investment advicereceived from the company or Benefit Plan sponsor. A person who providesBenefit Plan investment advice with respect to retirement assets underERISA is acting in a fiduciary capacity, and such advice must complywith ERISA's general prudence requirements. Specifically, ERISA §404(a)(1)(B) states that “the fiduciary should act with the care, skill,prudence, and diligence under the circumstances then prevailing that aprudent man acting in a like capacity and familiar with such matterswould use in the conduct of an enterprise of like character and withlike aims.” Thus, it appears highly questionable that a prudent expertwould ever use a “one size fits all” investment selection approach forall individual Benefit Plan participants (such as investing in amoney-market fund), given the clear known existence of the enormousindividual differences in funding requirements, time horizon, risktolerance, etc., and other factors related to making an optimum assetallocation and investment decision, including Benefit Plan assetallocation,

Moreover, prudent procedures generally require that an appropriateallocation of Benefit Plan investment asset classes be used that willyield the highest probability of meeting a particular Benefit Planparticipant's long-term investment objectives without exceedingtolerances for short-term investment market volatility. Again, it ishighly questionable that a prudent expert would recommend a conservativeBenefit Plan investment allocation such as a money market fund foryounger Benefit Plan participants, which when combined with a lowBenefit Plan default contribution rate, will likely ultimately result inthe realization of an inadequate amount of savings in order to fundfuture retirement income needs at an appropriate level without placingundue financial burdens on various government organizations andadversely impacting national budgetary considerations.

The Benefit Plan default investment allocation is important because anumber of studies have concluded that Benefit Plan asset allocationdecisions have the greatest impact on the overall long-term performanceof a Benefit Plan investment portfolio. A recent study found that, forpassive, long-term investors, asset allocation determines about onehundred percent (100%) of performance—regardless of whether one ismeasuring return variability across time, return variation betweenfunds, or return amount For the short-term investor, who trades morefrequently, invests in individual securities, and practices markettiming, asset allocation has less of an impact on returns. Thus, theimpact of asset allocation on performance is directly correlated withinvestment behavior. (See for example, Roger G. Ibbotson and Paul D.Kaplan, “Does Asset Allocation Policy Explain 40%, 90%, or 100% ofPerformance?,” Financial Analysts Journal, January/February 2000.)

It is believed that this study has particular significance for workersusing 401(k)-type plans to save for retirement. A study of year-end 1998data by the Employee Benefit Research Institute and the InvestmentCompany Institute (ICI) found that approximately seventy-five percent(75%) of 401(k) participants had not changed their equity allocations inthe previous two years. Thus, a substantial percentage of 401(k)participants exhibit long-term, passive investment behavior whenmanaging their self-directed retirement assets. For the great majorityof 401(k) participants (i.e., the “financially uninvolved”), assetallocation (rather than security selection or market timing) is thedominant determinant of performance on their individual plan accounts.

The problem with specifying a one-size-fits-all Benefit Plan defaultallocations is that, for individuals, appropriate Benefit Plancontribution levels and asset allocation determinations are based on theemployee's unique needs and circumstances, which change over time asemployees get closer to retirement and individual employee wealthincreases. The Benefit Plan goal should be to devise appropriatelong-term investment strategies that will assist employees with meetingboth their short, intermediate and long term investment objectives withthe least amount of unacceptable or inappropriate risk for theirparticular circumstances at a particular time. The risk an individualemployee can afford not only depends on his/her attitude towards risk,but his/her total financial situation. The earning ability outside theemployee's investments in the Benefit Plan is also important indetermining the individual employee's capacity for risk. Employees withhigh earning abilities are able to take more investment risk, becausethey can, more easily recoup from poor performing investment andresulting financial losses than those employees with lower earningabilities can.

The first step in arriving at appropriate Benefit Plan defaultinvestment strategy is to coordinate a savings plan with an optimalportfolio that facilitates the Benefit Plan participant to appropriatelyfund future retirement income needs. The criterion used for selectingthe initial Benefit Plan investment allocation is based on cash flowneeds and Human Capital; Human Capital being defined as the actuarialpresent value of future retirement savings, Benefit Plan pension income,and Social Security income. Thus, the variables important to thecalculation of Human Capital include retirement savings (401(k), IRA,etc.), current and retirement age, mortality and life expectancy,gender, real long term interest rates, Benefit Plan pension income andSocial Security income. Human Capital is usually the dominant asset foryoung and middle-aged employees as Benefit Plan financial assets wouldbe a tiny fraction of their total wealth.

Thus, in accordance with the above, it is quite reasonable for youngeremployees to hold an all-stock investment Benefit Plan allocation,because of their ability to offset short-term losses through adjustingfuture Benefit Plan investment strategy, consumption and savings. Asemployees become older, the proportion of Human Capital in total wealthbecomes smaller; therefore, over time the Benefit Plan investmentallocation needs to be gradually adjusted to become less aggressive.

As previously discussed, it makes little sense to use automatic BenefitPlan procedures to enroll younger employees and increase their BenefitPlan contribution level over time, and then use the Benefit Plan's moneymarket fund, or similar vehicle as the default Benefit Plan investmentchoice to invest their Benefit Plan contributions. Similarly, it may beimprudent to use the Benefit Plan's balanced fund, or similar vehicle asthe default Benefit Plan choice for older employees, who may lack theability to make up losses that may occur during adverse marketconditions.

Another problem that has long been acknowledged relating to optimizinginvestment portfolios for Benefit Plan participants is that the entitiesand/or persons most capable of delivering an optimum investment solutiontypically have financial interests that may be or are inconsistent withthat of the individuals who need investment allocation services. Forexample, in the case of entities that administer Benefit Plans, they aretypically the same entities that traditionally manage the investments ofthe investment vehicles normally offered in connection with BenefitPlans. Such investment managers receive most (if not all) of theircompensation as a percentage of assets managed, with such percentagesvarying according to the nature of the risk associated with theparticular investment vehicles. For example, an international equityfund* would typically pay a manager a higher percentage resulting in ahigher net profit than a domestic bond fund manager for funds* havingapproximately the same assets under management. In the case of financialintermediaries (such as licensed securities brokers), they typicallyreceive differing levels of initial and subsequent commissions dependingon the investment they choose or advise a person to choose.

Similar or identical conflicts of interest also occur when determininghow to invest at a time when persons are no longer working. For example,investors must choose at that time whether to purchase a stream ofincome (e.g., an annuity) in order to hedge against the risk ofoutliving the money that has been put aside for retirement. Persons whotypically provide assistance with these decisions receive commissionswhen they sell annuities and therefore have or may have interests thatcould affect the quality of the assistance that they provide. Personswho manage investments for a person, and are compensated based on apercentage of the amount they manage, would have an incentive torecommend or otherwise cause a person to withdraw amounts as slowly aspossible in order to maximize the income of the investment manager atthe expense of the investors best interest.

These situations could lead to persons with inconsistent interestsintentionally or unintentionally acting to cause amounts to be saved orinvested so that these persons with inconsistent interests enjoy ahigher income, a situation possibly not in the best interest of theindividual Benefit Plan participant whose finds are being invested bythe persons providing traditional services for the Benefit Plan.

Thus, there is a clear need for a new and innovative investment programthat eliminates or at least significantly ameliorates this economicconflict of interest by, for example, providing for a separation betweenthe entities or entity that determines how much to save and how thesavings should be invested from other compensated functions such as theinvestment management. Such an investment program should providecompensation for the critical functions of determining how much anindividual should save and how the savings should be invested in amanner that reduces or eliminates conflicts of interest including thosethat result from receiving compensation from other sources includingcompensation from investment management.

Such an new and innovative investment program should be implemented byseparating or not separating the Benefit Plan allocation and savingsfunction from the Benefit Plan money management function in such a waythat conflicts are, if not eliminated, at least ameliorated. As isknown, the substantial effect of conflicts on financial institutions hasbeen documented in the Study (Conflicts of Interest and the Credibilityof Underwriter Analyst Recommendations by Michaely and Wolmack publishedin 1999) that was cited before Congress in the hearings in Congress heldon Jun. 14, 2001, by the Committee on Financial Services, Subcommitteeon Capital Markets, Insurance and Government Sponsored Enterprises on“Analyzing the Analysts: Are Investors Getting Unbiased Information fromWall Street”. By providing that the two functions may be separated so asto ameliorate or eliminate such conflicts, implementing such an new andinnovative investment program would increase the likely and perceivedquality of the Benefit Plan allocation services with a correspondingpositive effect on the marketplace and individual Benefit Planparticipant confidence, thus making optimum Benefit Plan savings morelikely.

The above separation should also eliminate the need for artificial andless precise mechanisms to address issues such as fee leveling (chargingthe same fees for each investment vehicle), as these other methods donot precisely address the fundamental conflicts, which are variableprofits, since the same fee may result in higher profits. The aboveseparation should also eliminate offsets, or offsetting the cost ofinvestment vehicles with higher fees by rebating a portion of the fees,directly or indirectly to a Benefit Plan, which also may cause certainfunctions to be more profitable and others to be underpaid because, likefee leveling, offsets only addresses the gross amount (and not theprofits) of the fee paid.

Thus, there is a clear need for an new and innovative investment programthat separates the Benefit Plan allocation and money managementfunction, which would be significant improvement over the aforementionedoffset mechanisms, as the Benefit Plan allocation and money managementfunction separation also addresses conflicts that can occur during boththe Benefit Plan accumulation and disbursement modes for investing whenthe subject services (e.g., Benefit Plan asset allocation, Benefit Planformulation/implementation of saving plans, and Benefit Planformulation/implementation of distribution plans) are controlled by thesame person.

In this connection, there is also a need to insure that the aboveservices, which have traditionally been paid for indirectly, e.g., fromcommissions paid for executing Benefit Plan stock trades or fees fromBenefit Plan money management, are ameliorated, as this traditionalpayment may have contributed to the unacceptable current state ofaffairs, which finds that many persons will not obtain the benefit ofthe subject Benefit Plan services if they have to pay a separatelystated fee for them, even though the subject Benefit Plan servicesclearly provide more value than other Benefit Plan services for whichparticipants pay more (e.g., Benefit Plan asset management). Typically,when other services subsidize the subject Benefit Plan services, thereis a temptation for Benefit Plan service providers to maximize theirprofits, often in a manner that is to the detriment of an individualBenefit Plan participant (e.g., churning or excessive trading), makingit desirable to separate these Benefit Plan services from other BenefitPlan functions so that the fees for the Benefit Plan subject servicescan remain non-obvious, but that other Benefit Plan functions thatsubsidize these Benefit Plan services will not be utilized in a mannerthat disrupts the subject Benefit Plan services. This is believed to besignificant because the subject Benefit Plan services will determine thegreat majority of an investor's investment returns.

In this regard, the new and innovative investment program should addressthe conflict of interest that could occur in connection with thefollowing: the system commits investors, with a minimum of indicativedata, to as automatically as is possible or practical, allocate aportion of the investors' future salary increases towards retirementsavings, based on formulae originated and/or approved by a person orpersons, possibly including a determination of what constitutes aminimum of indicative data, who are independent of persons who receiveother compensation such as fees for Benefit Plan money management.Ideally, the new and innovative investment program should result inautomatic Benefit Plan deductions from which Benefit Plan participantshave to affirmatively elect to opt out of, if they wish to discontinueBenefit Plan participation and/or change their contribution to theBenefit Plan.

The systems and methods of the new and innovative investment programshould automatically as is possible or practical allocate Benefit Planinvestment assets to an optimal combination of asset classes on aregular basis, based on the unique facts and circumstances of eachindividual investor, either based on an election by the person whoseassets are invested or by a third party who is independent of personswho earn variable fees and profits by reason of the allocation of theassets or the savings levels established, in order to systemicallyaddress and ameliorate any potential conflict of interest. The BenefitPlan allocation should result either from a single or multipleaffirmative directions or in the case where a third party can act onbehalf of the individual, with no direction from the individual.

The systems and methods of the new and innovative investment programshould choose or assists persons in choosing an appropriate manner inwhich to receive Benefit Plan income during a time when they are nolonger saving but instead consuming prior savings (e.g., at retirement).

The systems and methods of the new and innovative investment programshould provide for oversight of the conditions designed to eliminate orameliorate conflicts of interest within the Benefit Plan.

The systems and methods of the new and innovative investment programshould provide a guarantee, whereby professional Benefit Plan allocationis precisely implemented according to the criteria specified by theIndependent expert and is guaranteed to those investors who participatein the investment program.

The systems and methods of the new and innovative investment programshould in addition to using automatic Benefit Plan savings based on theunique characteristics of the individual Benefit Plan participant (whichsavings amounts are formulated or approved by the Independent expert),including automatic enrollment in pension plans, to provide appropriatesavings, resulting in most cases a substantial boost in savings, and inthe case of pension plans to increase Benefit Plan participation ratesand then automatically tailor each investor's Benefit Plan investmentplan to each investors unique circumstances, making appropriate changeson a regular basis, without obtaining an affirmative election from theBenefit Plan participant each time a change is made, while, in the caseof pension plans, help address the needs of the employer who sponsorsthe Benefit Plan for participant investment safety.

The systems and methods of the new and innovative investment programshould address the above indicated needs by utilizing safeguards thataddress the Benefit Plan conflicts of interest, thereby reducing theBenefit Plan sponsors' responsibility and exposure in selecting andmonitoring the Benefit Plan investment program.

The systems and methods of the new and innovative investment programshould address the problems resulting from the fact that currently,individual Benefit Plan participants are either: 1) too involved in theprocess of selecting Benefit Plan investments and frequently do so bychoosing Benefit Plan investments based on the recent performance ofindividual Benefit Plan investment vehicles; 2) do not save appropriateamounts to meet their goals, including retirement; or 3) more often,feel that they do not have the time, interest, and/or expertise to makeappropriate Benefit Plan investments or structure appropriate BenefitPlan savings plans.

The systems and methods of the investment program should solve the aboveproblems by minimizing the input required by individuals and automatingthe Benefit Plan process to the greatest possible extent whileeliminating or ameliorating the conflict of interest that normallyexists between parties that provide these Benefit Plan services.

The systems and methods of the new and innovative investment programshould enable a person who operates the Benefit Plan investment programto, offer a meaningful guarantee (e.g., no fees are owed if theinvestment program is not 100% effective) regarding its effectiveness.The guarantee can be that the allocations for investors will preciselymatch the criteria of the Independent Expert. No person who currentlyoffers “investment advice” or “education” and is solvent has or couldreasonably offer a meaningful guarantee.

The systems and methods of the new and innovative investment programshould offer such a guarantee because they are granted discretionaryinvestment management authority from the individual plan participant ora third party on behalf of an investor, and thus exercise control of theallocations on a regular basis. “Investment advisors” will not make sucha guarantee because they are granted non-discretionary investmentmanagement authority, and thus do not exercise control of theallocations on a regular basis.

The systems and methods of the new and innovative investment programshould result in limiting legal exposure by providing an automaticallocation based on the individual characteristics of participants and aformula established by an Independent Expert.

The systems and methods of the new and innovative investment programshould provide a data processing system that reduces their input andenables individuals, including 401(k) participants, or persons acting ontheir own or their behalf, to turn over some or all of these decisionsto others, including the ability to automatically enroll and commitemployees in advance to allocate a portion of their future salaryincreases towards retirement savings, which participants have to opt outof if they wish to discontinue. The net result should be thatindividuals are more likely to achieve their goals mostly because itutilizes the natural tendency of most individuals to minimize theirinvolvement (many take no action whatsoever) in formulating andimplementing savings and investment plans.

The systems and methods of the new and innovative investment programshould minimize individual involvement as such has a corollary benefitin that when individuals are too involved individuals tend to engage inexcessive trading of their individual accounts. Research demonstratesthat active trading, on the average, materially diminishes investmentreturns. If individuals are less involved, individuals are less likelyto trade and are therefore more likely to enjoy greater investmentreturns.

The systems and methods of the new and innovative investment programshould recognize a savings method, like automatic enrollment, that isgrounded in findings about the psychology of decision-making. First,most workers realize they need to save more, but lack discipline.Second, restrictions on consumption are much easier to accept if they donot affect current consumption (i.e., they take effect in the future).For example, we all plan our exercise and dieting regimes to start nextweek or month. Third, people are very sensitive to perceived losses intheir welfare. While we can imagine foregoing some gain, bearing a lossis much more difficult. And fourth, people tend to code gains and lossesin nominal rather than real dollars, so, for example, a pay increasethat is less than the rate of inflation may still be considered a gainrather than a loss.

The systems and methods of the new and innovative investment programshould use the principles that current plan participants with lowcontribution rates (i.e., less than 3 percent) and new/existingemployees who are not yet participating in the plan are automaticallyenrolled in a plan that asks for a modest commitment now that graduallyincreases their contribution level over a period of a few years. Theamount should generally be a fixed percentage (e.g., 2-3%) or aproportion of the pay increase (e.g., ⅓ or a ½).

The systems and methods of the new and innovative investment programshould, by timing the increase to coincide with the pay increase, assureemployees that their take home pay is not diminish. In fact, since thecontribution to the saving plan is tax deductible, only part of theincreased saving is out-of-pocket, and the actual change in the paycheckis likely to be unnoticeable. The increases continue until the workerreaches the appropriate tax sheltered contribution, or until the workeropts out of the plan.

The systems and methods of the new and innovative investment programshould, once employees are in the plan and automatically use thissavings method, recognize the inertia will help keep the employees inthe plan, as the vast majority of employees will not notice thedifference in take home pay, but in a few short years certainly noticethe difference in their individual Benefit Plan account balance. Infact, since the contribution to the savings plan is tax deductible, onlypart of the increased savings is out-of-pocket, and the actual change inthe paycheck is likely to be unnoticeable.

The systems and methods of the new and innovative investment programshould use a data processing system that collects, monitors and directsinformation from individuals including pension plan participants,sponsors, recordkeepers and money managers, to optimally allocateinvestment assets, including but not limited to pension assets, forindividual investors/plan participants based on their unique facts andcircumstances, with a minimum of input from the individual including asingle election or without an affirmative election from planparticipants. Such allocation should be automatically used to investindividual investment assets, including assets in a 401(k) plan, whichwill be monitored and automatically adjusted over time by qualifiedexperts, unless the individual elects to opt out of the automaticallocation plan with an affirmative investment election.

The systems and methods of the new and innovative investment programshould be used in conjunction with the automatic enrollment andcontribution methods discussed above. As such, it can be used by plansthat use automatic enrollment for new employees, and for currentemployees who either do not currently participate in the plan or doparticipate in the plan but have not elected compensation reductioncontributions of a minimum amount (e.g., at least 3 percent). Inaddition to 401(k) plans, the automatic allocation plan will be madeavailable to 403(b) retirement plans, which serve millions of employeesof public schools, educational and charitable organizations (the 403(b)is a tax deferred retirement plan available to employees of educationalinstitutions and certain nonprofit organizations which are exempt fromtax under section 501(c) (3) of the Internal Revenue Code, and which isintended to meet other requirements established under the InternalRevenue Code), and to 457(b) plans, which serve employees of state andlocal governments and tax exempt organizations under IRO 501(c), andwhich is intended to meet other requirements established under theInternal Revenue Code (a 457(b) plan is a tax deferred compensation planthat works in many respects like other retirement plans such as the403(b) and 401(k). Created in 1978 the name refers to the relevantsection (457) in the Internal Revenue Code that governs the plan).

The systems and methods of the new and innovative investment programshould insure that an appropriate allocation is made for each individualparticipant on a regular basis, the data processing system will includea relational database that will be continually updated with relevantemployee indicative data (e.g., age, salary) and employer plan data(participation status, investment options, employer match, accountbalance, etc.), which is provided from outside sources including theemployer and the plan recordkeeper. The data is used to feed thefinancial analytic engine that will automatically allocate an optimalinvestment portfolio on a regular basis—based on the participant'sretirement income replacement needs and human capital value.

SUMMARY OF THE DISCLOSURE

Therefore, an object of the present disclosure is to provide aninvestment solution to investors, including Benefit Plan participants,in attaining appropriate savings levels and asset allocation for theirinvestments including assets in their individual plan accounts on aregular basis.

Another object of the present disclosure is to provide a new andinnovative investment program that provides for appropriate savings,including utilization in self-directed Benefit Plans.

Another object of the present disclosure is to provide the ability tocollect indicative data from a variety of sources, including theinvestor, which is used to determine appropriate savings levels andasset allocations for investors on a regular basis, including individualBenefit Plan participants.

A further object of the present disclosure is to provide for theautomatic savings and/or allocations of investment assets (includingmaking such allocations on an ongoing basis) based on an analysis ofindicative data.

A still further object of the present disclosure is to assistindividuals in determining how to invest and in choosing an appropriatemanner in which to receive income during a time when they are not longersaving, but instead consuming prior savings (e.g., retirement).

The new and innovative investment program, which includes the presentsystems and methods, integrates the level of savings with appropriateasset allocation in a manner that minimizes input by investors on aregular basis. Investors may be assisted in providing their informationand making appropriate decisions by a facilitator. The determination ofhow much to save and how to allocate investments is determined byperson(s) compensated in a manner which is generally or totally separateand independent from other fee generating functions such as traditionalinvestment management fees (normally a percentage of the assets undermanagement).

The systems and methods of the present disclosure eliminate or at leastameliorate possible economic conflict of interest by separating or,appropriately combining, the determination of how much to save and howto allocate investment assets from other fee generating functions suchas investment management. The person(s) who determines or approves theasset allocation and savings rate (the Independent Expert) receives feesthat are generally or totally independent from the fees charged forinvestment management. The Independent Expert is generally or totallyindependent from and unrelated to any other person who receivescompensation in connection with the subject transactions (whichtransactions include a decision not to change any decision includingasset allocations) including any investment manager. The systems andmethods of the present disclosure can assure that the investment manageris unaware of the individual pension participant investments, but rathersees only the aggregate investments of a Benefit Plan sponsor.

One aspect of the present disclosure is a unique data processing systemthat provides expert independent asset allocation on a basis thatminimizes the input and time of investors and similarly assists them inestablishing savings investment programs while, at the same time,offering professional asset management (including index funds) at a moreefficient cost structure and eliminates or reduces all of the conflictsof interest that would exist in all the presently known schemes ofproviding investment allocation and/or savings investment programs toinvestors, including Benefit Plan participants.

One representative system for providing asset allocation and savingsservices to individuals includes a data storage for storing data from aplurality of sources, including the individual; means for processing thedata from each source such that a savings investment program as well asan asset allocation model consisting of at least one asset class isestablished, the asset class(s) may including varying proportions ofshares (or other interests) in a plurality of investments, possiblyincluding collective investment vehicles; and a means for allocatingassets into a combination of at least two assets classes as appropriatefor each individual and generating a tangible report recommending, ordirectly establishing a savings investment program that is appropriatefor each individual.

One representative computer implemented method for providing independentasset allocation and savings investment programs to individuals forinvesting in one or more asset classes including professionally managed,cost efficient, commingled investment vehicles while eliminating orameliorating the conflict of interest between establishing assetallocation and investment programs and other functions such as moneymanagement includes the steps of: developing mechanisms that elicit thefunding needs of each individual; developing a savings investmentprogram and an asset allocation model consisting of at least one assetclass generally using generally accepted principles of modern portfoliotheory; applying the data from a plurality of sources to the assetallocation model; coordinating the savings investment program with theasset allocation model; determining an appropriate investment vehicle orcombination of vehicles for the individual; and implementing investmentsin at least one asset class or at least (1) combination of at the atleast two (2) asset classes.

Other objectives and advantages of the present application will becomeapparent from the following description, the accompanying drawings andthe appended claims.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 is a block diagram generally illustrating the structure of arepresentative investment program including representative systems andmethods related thereto;

FIG. 2 is a representative detailed block diagram of one representativeimplementation of one representative investment program incorporatingthe systems and methods related thereto;

FIG. 3 is a representative diagram illustrating one representativeinvestment allocation and management system of the present disclosure asseen by each investor including individual plan participants;

FIG. 4 is a representative diagram illustrating one representativeinvestment allocation and management system of the present disclosure asseen by benefit plans; and

FIG. 5 is a representative schematic diagram of representative computerhardware useful with the representative investment services of thepresent disclosure.

DETAILED DESCRIPTION OF THE DISCLOSURE

In carrying out the present disclosure in representative preferred formsthereof, we have provided a representative new and innovative investmentprogram 10 that includes representative systems and representativemethods for providing representative savings plan services 12 anddiscretionary asset allocation services 14 during the accumulation mode(e.g., prior to and during employment), and discretionary andnon-discretionary asset allocation services 16 during the disbursementmode (e.g., after employment) for individual investors 18 including, butno limited to, participants in Benefit Plans or third parties 20 actingon their behalf, as illustrated in FIG. 1. Savings plan services 12 arethose services that assist investors during the accumulation mode suchas helping to determine or simply implementing the timing and amount ofamounts deducted from a paycheck for contribution to a savingsarrangement or vehicle such as a Benefit Plan.

In implementing these representative systems and representative methods,an investment program provider 22 will generally offer the investmentprogram 10 together with representative investment allocations 26, 28,30, 32, 34, as well as annuities and other disbursement mechanisms 36,which are formulated with investment vehicles 24 representing differentasset classes that my be used to implement the investment program 10.Any such allocations 26, 28, 30, 32, 34 and/or annuities and otherdisbursement vehicles 36, as well as the individual vehicles 24 andasset classes used to implement the investment program 10 during theaccumulation and disbursement mode(s), are selected by or subject to theapproval of an Independent Expert 38, as defined hereinafter (see FIG.2), who must find or approve that the investment program 10 can beimplemented using the vehicles 24 and annuities 36.

Investor 18, as used in the present application, is a natural orunnatural person, who could benefit from one or more of the services 12,14, 16 under the investment program 10, including individualparticipants and/or beneficiary of a Benefit Plan who may direct theinvestments of their individual plan account(s). Thus, the termparticipants in Benefit Plans, as used in the present application,include participants and beneficiaries in Benefit Plans. As illustratedin FIG. 4, Benefit Plans 100, 102, 104 are arrangements, includingassociated vehicles, designed to assist natural persons in saving forthe period that begins after termination of employment A third party 20is any person who is responsible for making determinations whether andhow to utilize the services 12, 14, 16 offered under the investmentprogram 10.

In the case of an investor 18, including a Benefit Plan 12, with a largeamount of assets the investment program operator 22 may negotiate withregard to the investment vehicles 24 and/or annuities 36 used toimplement the investment program 10 and even as to the formulae uponwhich asset allocation and/or distribution will be determined, subjectto the approval of the Independent Expert 38. (As defined herein, theIndependent Expert is a person or persons who is generally or totallyindependent of persons involved in the Investment Program 10 who mayhave interests that are not consistent with the investors 18, in certaincircumstances employers sponsoring Benefit Plans 100, 102, 104 may beIndependent Experts). The negotiations may include the extent to which aseparate fee is paid for the investment program 10 and/or the extent towhich any such fees is subsidized by the fees paid in connection withinvestment vehicles 24 and/or distribution options (e.g., annuities 36)that are affiliated with the program operator 22. The investment programoperator 22 then offers discretionary asset allocation during theaccumulation mode 14; formulation/implementation of (as well as advice)regarding savings plan services 12 during the accumulation mode andformulation/implementation of (as well as advice on) discretionary andnon-discretionary asset allocation during the disbursement mode 16.These services 12, 14, 16, 18 may be offered singularly or in anycombination.

The Investor 18, or a third party 20 acting on behalf of an investor,including participants in Benefit Plans 100, 102, 104, then chooseswhich services 12, 14, 16 to utilize and selects which investment assets24 they wish to be in the program 10. For example, in the case of asection 401(k) plan, the person acting at the plan level 100, 102, 104may decide that amounts that the employer contributes to the plan willbe invested in employer securities and will not be part of theinvestment program 10. And, in the case of investors 18, includingparticipants in Benefit Plans 100, 102, 104, some may also wish toconstrain certain assets (e.g., do not sell the home I rent to mymother) and receive asset allocation services on the non-constrainedassets.

In cases where a third party 20 (e.g., the employer sponsoring the plan)acts on behalf of a participant 18 in a Benefit Plan 100, 102, 104 tocause the individual plan participant to participate in one or moreservices 12, 14, 16 of the investment program 10, the investment program10 will generally provide an opt out provision 40, which will enable anindividual plan participant to opt out at 42 of one or more services ofthe investment program 10. Under limited circumstances, there may be noability to opt out of the investment program 10.

As illustrated in FIG. 2, indicative data 44 (which can be obtained fromthe participant 18 in a Benefit Plan and/or third parties 20 such asbenefit plan recordkeepers, payroll offices, custodians, etc.) regardingthe individual plan participant 18 is then provided by the individualplan participant 18 and/or third party 20.

In this connection, the Independent Expert 38 determines or approves theminimum data requirement at 46 necessary to make an initialdiscretionary asset allocation during the accumulation mode 50 with orwithout any additional input from the participant 18 in a Benefit Plan.If the minimum data requirement 46 is met at 48, then the investmentprogram 10 can make the initial allocation at 50 of the investmentassets 24 to be held during the accumulation mode 14. If the minimumdata requirement 46 is not met at 52, then the additional informationmay be inputted at 54 by other means, such as, for example, by afacilitator 80 calling a participant 18 in a Benefit Plan on thetelephone, and obtaining additional data and inputting 54 on behalf ofthe participant.

Once the minimum data requirement is met at 48, then the investmentprogram 10 makes an initial allocation at 50 of the investment assets tobe invested during the accumulation mode 14 consisting of an allocationto 26, 28, 30, 32, 34, which are one or more investment vehicles 24 thatrepresent one or more asset classes. Existing investments are converted,through sales and/or purchases or otherwise at 56, 58, 60, 62, 64, 66,68, 70, 72, 74 to the investment vehicles 24 used to implement theinvestment program 10. Amounts are deducted from the pay or incomestream of individual plan participants 18, purchases from the investmentvehicles 24 used to implement the investment program 10 are made. In thedisbursement mode 16, distributions from investment vehicles 24 arescheduled and/or purchases of annuities 36 are made or other mechanismsare utilized.

Additionally, the investment program 10 can implement the savings planservices 12 during the accumulation mode 14. The savings plan services12 include: advice or guidance with regard to the timing and amount ofsavings at 76; and/or the automatic implementation of a savings programat 78, which is coordinated with discretionary asset allocation servicesduring the accumulation mode 14. The data related to the savings planservices 12 can come from a variety of sources and include, but are notlimited to salary and amounts saved, including amounts in other BenefitPlans 100, 102, 104

In connection with the collection of initial data, facilitators 80 mayassist the individual plan participant 18 with an understanding of theinvestment program 10, and in collecting and transmitting data necessaryto meet the minimum requirement at 46 as solely determined by theIndependent Expert 38. As presently envisioned, the facilitator 80 hasno ability to formulate or vary the formulation of any services 12, 14,16 provided under the investment program 10. Also, the compensation ofthe facilitator 80 will generally be designed and implemented such thatthere will be no incentive to depart from the program's allocations at26, 28, 30, 32, 34 during the accumulation mode 14, and annuities andother mechanisms 36 during the disbursement mode, though the facilitator80 may generally receive increased compensation for success inenrolling/maintaining individual plan participants in the investmentprogram 10, but generally may not receive increased compensation for theallocation mode 14 and the amount saved under the amounts saved 12pursuant to the savings plan services during the accumulation mode 14,and annuities and other mechanisms 36 during the disbursement mode 16.

Rather, the principal role of the facilitator 80 is to elicit current,complete and accurate information from the individual plan participants18 on a regular basis. The facilitator 80 may also provide informationto the individual plan participants 18, explaining the operation and thebenefits of the investment program 10 on a regular basis, which may takeinto consideration significant economic events (e.g., recession). Inthis regard, the facilitator 80 may regularly contact the individualplan participants to obtain and/or supply current information. Forexample a facilitator 80 may assist individual plan participants in401(k) investment plans with the decision as to whether or not to electto opt out at 42 of the savings deferral program 78 and/or allocationprogram 14 that was implemented automatically at the direction of athird party 20. The facilitator 80 may directly input information intothe indicative database 44, resident on the computer 82, on behalf of anindividual plan participant 18.

If such data is directly inputted at 54 into the indicative database 44,selected services 12, 14, 16 of the investment program 10 are thenimplemented. At a time shortly before or after the implementation,individual plan participants may receive an individual policy statement84. This statement 84 confirms the indicative data 44 and the actionthat will be or was taken based on the indicative data 44. Theinvestment program 10 may contact at 86 the individual plan participant18 on a regular or irregular basis through electronic means orotherwise. The individual plan participant 18 may be assigned to afacilitator 80, who may contact the individual plan participant 18 on aregular or irregular basis for the purposes previously described. Thequality of the services provided by the facilitator 80 will generally bemonitored by a computer program 88 designed or approved by theIndependent Expert 38. The monitoring computer program 88 may determine,among other things, whether the data 44 was appropriately provided, andwhether the investment vehicles 24 and from the savings plan services 12were appropriately provided and implemented, in accordance with the datareceived.

Another innovative aspect of the present system and methods includesprovisions for making certain adjustments to the allocations 14, savings12 and/or disbursements 16 under the investment program 10, which may bemade on an ongoing basis. Adjustments may be made based on updatedinformation, on information obtained via contact with facilitators 80 orotherwise by investor contact at 86. The updated information is inputtedat 54 into the computer program resident on the computer 82 and changes,if any, to the allocation(s) 26, 28, 30, 32, 34 and savings program 12are implemented based on the new information received in accordance withthe procedures established or approved by the Independent Expert 38.Other changes, including reallocation of assets at 90, will be made dueto the passage of time (e.g., the aging of the individual planparticipant) and external changes (e.g., changes in the capital markets)also in accordance with the procedures established or approved by theIndependent Expert 38.

Disproportionate investment returns may also trigger the investmentvehicles' representing the different asset classes 24 in an individualplan participant's account 18, 18 a, 18 b, 18 c to be disposed of andacquired in order to maintain the asset allocation(s) 26, 28, 30, 32, 34provided by the investment program 10. In other words, the program willgenerally be rebalanced at 92 on a regular basis, in accordance with theprocedures established or approved by the Independent Expert 38.

All of the implementations and changes will be based on the indicativedata 44 that is inputted at 54 into the computer program resident on thecomputer 82 and then processed by that computer program, which wasdesigned and/or approved, implemented and monitored by the IndependentExpert 38. As noted above, in yet another innovative aspect of thedisclosed investment program 10, the Expert 38 will be generallyindependent from other parties who receive variable fees and/or profitsbased on the amount of assets invested, or the discretionary allocations26, 28, 30, 32, 32, 34 implemented during the accumulation anddisbursement modes, or the non-discretionary allocations 26, 28, 30, 32,32, 34, 36 recommended by the computer program resident on the computer82 during the disbursement mode 16 in accordance with the proceduresestablished or approved by the Independent Expert 38.

Similar or identical mechanisms, such as, for example, the computerprogram designed and/or approved, implemented and monitored by theIndependent Expert 38, are used to address the conflicts of interestthat can occur when determining how to establish a spending program thatassists individual plan participants 18 to minimize taxes, to the extentpractical achieve security for their income through retirement andmanage their investment and mortality risk during the disbursement mode16 (e.g., after employment). At retirement, individual plan participants18 should optimally develop income strategies potentially using avariety of products (including annuities and other mechanisms 36) withtheir wealth accumulated during the accumulation mode 14 to reach targethorizons to minimize the chances of outliving their accumulated wealthand/or to achieve additional objectives.

As is known, licensed securities brokers, or other persons who typicallyprovide assistance with these decisions, receive commissions whenannuities and other mechanisms 36 are sold and, therefore, have or mayhave interests that could affect the quality of the assistance that theyprovide and may be adverse to the individual plan participants' 18interest. Licensed securities brokers, or other persons who manageinvestments for individual plan participants 18, and are compensatedbased on factors that may not be consistent with the interest ofindividual plan participants 18 could have an interest in recommendingor implementing inappropriate investment and/or disbursement strategiesin order to maximize the licensed securities brokers' income rather thanmaximizing the individual plan participants 18 income.

In the disbursement mode 16, the representative systems and methodscontained in the representative investment program 10 assists individualplan participants 18 to develop appropriate income strategies to reachtarget horizons with wealth levels pursuant to procedures and/ormechanisms determined or approved by the Independent Expert 38 on anongoing basis. The program's 10 disbursement services at 94 may include,but are not limited to, combinations such as, for example, annuitizationand other mechanisms 36; such as spend down; IRA rollovers; installmentpayments; and withdrawing a fixed amount or fixed percentage. Thedisbursement services 92 provided as a component of the presentinvestment program 10 will also assist individual plan participants 18to establish appropriate asset allocations 26, 28, 30, 32, 34, which mayvary and change for different accounts and as investors' age, asdetermined or approved by the Independent Expert 38. The disbursementservices 92 may also assist individual plan participants 18 to alter theaccount sequence of portfolio withdrawals with a drawdown sequence tohelp maximize after-tax cash flow and/or wealth preservation. As anoperating component of the present investment program 10, these services92 can be provided on an automatic (discretionary basis) or an advisorybasis (non-discretionary) or on a combination of both, as determined orapproved by the Independent Expert 38.

In accordance with the implementation of the present investment program10, all of the implementations, recommendations and changes will bebased on the indicative data 44 that is inputted into the computer 82and processed by the computer program 146 designed and/or monitoredand/or approved by the Independent Expert 38. As noted above, the Expert38 will be generally or totally independent from all other parties, whoreceive variable fees and/or profits based on the amount of assetsinvested, or the discretionary alternatives implemented, or thenon-discretionary alternatives recommended by the investment program 10.The indicative data 44 is processed by the computer program 146 residenton the computer 82. The program resident on the computer 82 thenimplements (in the case of a discretionary service) or advises theindividual plan participant 18, through a facilitator 80 or otherwise asto the specific steps that should be taken, and implements theinstructions of the individual plan participant 18. In this regard, theinvestment program 10 may suggest a course of action that will beimplemented unless the individual plan participant opts out at 42.

The program services 12, 14, 16 are coordinated on a continuing basisand are specifically tailored to each individual plan participant's 18individual circumstances and short-term, intermediate-term and long-termfunding needs, including retirement funding needs. The systems andmethods utilized in the present investment program 10 are particularlyvaluable because they provide individual plan participants 18 with muchneeded asset allocation services 14, 16 and while possibly formulating,and in all cases taking into account the individual plan participantssavings 12, including the present value of all current and futuresavings (including social security benefits and benefits under otherpension plans) so that each individual plan participant 18 will, oncethe investment program 10 is implemented, maintain a disciplinedinvestment policy while being responsive to the best interests of eachindividual plan participant 18. Moreover, the investments will generallybe professionally allocated at 50, rebalanced at 92, reallocated at 94,and disbursed at 94 pursuant to criteria established or approved byIndependent Experts 38, generally with the on-going assistance offacilitators 80 to exploit opportunities in all types of marketconditions in a manner that most individual plan participants 18, wouldnot or could not exploit on their own without competent, conflict freeassistance.

The system and methods of the present investment program 10 areuser-friendly in that the investment program 10 is specifically designedto eliminate the confusion typically suffered by individual planparticipants 18 by minimizing the individual plan participants 18 inputand decision points concerning savings 12, asset allocation 14, anddisbursement 16 of assets after employment and/or during retirement Theresult of utilizing the present investment program 10 is thatappropriate savings, allocation, and disbursement are easier for thevast majority of individual plan participants 18 and therefore morelikely to occur, which, in the case of certain types of Benefit Plans,may assist plan sponsors to fulfill the primary purpose of such BenefitPlans, which is to provide income after termination of employment foreligible employees.

Yet another innovative feature of the present investment program 10includes the elimination for the necessity of establishing, as is commonpractice, lifecycle trusts or even separate modeled portfolios. In fact,an appropriate allocation developed and maintained for an individualplan participant 18 can be precisely calculated to the need of andtherefore unique to the individual plan participant 18, with fees forallocation services obtained by selling interest 56, 58, 60, 62, 64, 66,68, 70, 72, 74 in the vehicles, or from the individual plan participant18 or from third parties 20 representing individual plan participants,by utilization of at least some of the components of the presentinvestment program 10.

Utilization of the present investment program 10 further refines theallocation process, enabling the allocation process, or the process ofallocating assets in one or more asset classes, generally utilizinginvestment vehicles to be more precise by further separating theallocation process from the investment vehicles. As is known andcurrently believed conventional, the sponsors of the investment vehicles24 pay for many services out of the money management fees that arecharged to the plan sponsor. This process separates the individual planparticipant 18 and/or plan sponsor 100, 102, 104 from any dependence onmaking satisfactory arrangements with the sponsor(s) of the investmentvehicle(s) 24.

One aspect of the investment program 10, which is described in thepresent disclosure, is the Independent Expert 38 that constructs orapproves, among other things, appropriate asset allocation 26, 28, 30,32, 34, and annuities and other mechanisms 36. The Expert 38 isgenerally or totally independent from other persons, such as, forexample, persons who manage investment vehicles 24 associated with theinvestment program 10 who may benefit from investments made under theinvestment program 10.

As presently envisioned, the formulation or approval of assetallocations 26, 28, 30, 32, 34, and annuities and other mechanisms 36 bythe Independent Expert 38 may include, but is not intended to be limitedto, algorithms, studies, analytics, research, models, papers and otherwork product or relevant materials provided by others, including theprogram operator 22. The program operator 22 is the person who operatesthe investment program 10. It is anticipated that persons who manageinvestment vehicles will have the most incentive to become programoperators 22 because operating a in an investment program 10 willgenerally lead to continuing, and profitable, relationships with thepersons 18 assisted under the investment program 10. Furthermore, theIndependent Expert 38, in its sole and absolute discretion, may seek theassistance of others in formulating or approving the asset allocation(s)26, 28, 30, 32, 34, and annuities and other mechanisms 36.

However, in all cases, the Independent Expert 38 retains the ultimatecontrol and discretion with respect to the development and maintenanceof the asset allocations 26, 28, 30, 32, 34, and annuities and othermechanisms 36. The asset allocation(s) 26, 28, 30, 32, 34, and annuitiesand other mechanisms 36, as expressed in a computer program resident onthe computer 82, when implemented will not be static, but rather onlythe Independent Expert 38 in the Independent Expert's 38 sole andabsolute professional discretion (including the ability to approve) maymake or approve adjustments to the asset allocation(s) formulae, takinginto consideration the individual plan participant's 18 investment goalsand savings programs that the asset allocation(s) represent, and toaccount for changes in the economy and market conditions. Thus, thecombinations will employ, for the benefit of individual planparticipants 18, concepts based on finding needs, including the presentvalue of all savings (present and future), and the influence by otherpersons who may have interest that differ from that of the individualplan participant 18 will be strictly limited in a manner that eliminatesor ameliorates any conflict of interest. For example, the compensationthat such persons can pay to the Independent Expert 38 may be limited(e.g., to not more than 5% of the Expert's 38 annual total income orrevenues) and/or by limiting the ownership interests that person(s) canhave in the Independent Expert 38.

The information furnished, including information provided by theindividual plan participant, is possibly one key to providing impartialasset allocation services 14, 16 and/or establishing a savings plan 12for individual plan participants 18. Thus, by incorporating an objectiveprocess in to the present investment program 10, the inherent conflictof interest, which can result from the way fees are traditionally paidin conventional investment vehicles, is effectively ameliorated oreliminated.

Specifically, as is well known, under conventional investment programs,by implementing or recommending a more aggressive allocation, thetypical money manager, such as, for example, a mutual fund manager (aswell as intermediaries such as licensed securities brokers), wouldreceive higher fees and net profits, because equity weighted mutualfunds* typically pay their managers as well as intermediaries more thanbond weighted mutual funds or other lower risk funds.

As shown in FIG. 4, a system monitor 96, completely independent ofperson(s) who receives variable fees and profits, may be responsible formonitoring the investment program 10, which preferably includes acomputer program 146 designed or approved, implemented and monitored bythe Expert 38, to insure that safeguards designed to ameliorate theconflicts of interest are kept in place and complied with at all times.The computer program, and/or the monitor 96, may, in addition, bemonitored and/or certified by third parties (e.g., an accounting firm),having no financial interest in the specific investments being made inthe sponsors plan for individual plan participants 18 to ensure that theconditions safeguarding against conflict(s) of interest are in place andhave been adhered to.

Under the present investment program 10, which includes the systems andmethods described in the present disclosure, there may be a separate feepaid for asset allocation services 14, 16 and/or the establishment of asavings program 12, which may be limited to an annual asset based fee(e.g., up to 100 basis points) and reimbursable expenses (in the case ofBenefit Plans which invest “direct expenses”) which may be similarlylimited to a percentage of the total amount invested (e.g., up to 25basis points). In the alternative, the program operators 22 may chargeonly the fees from the investment vehicles or investments in which anindividual plan participants 18 assets are placed 24.

FIG. 3 is a schematic representation of the investment program 10structure as seen by each of a plurality of individual plan participants18, 18 a, 18 b, 18 c. As illustrated, the party 106 operating theinvestment program 10 (e.g., financial services company, financialintermediary 144, etc.) communicates with a system monitor at 96 thatcontrols the computer 82 having the computer program resident thereonwhich in turn communicates with each individual plan participant 18, 18a, 18 b, 18 c electronically or other conventional means, as is known inthe art.

The computer based system monitor 96 collects data from each underlyingservice, including, where utilized, services 12, 14, 16 and can keeptrack of each investor's account. The computer based system monitor alsocollects data and transaction instructions from the program operator 106and carries out transactions changing the allocation(s), saving plans,and/or distribution mechanisms of an individual plan participant' 18, 18a, 18 b, 18 c account upon any change in the indicative data 44, whichmay occur from the passage of time (aging of the investor) or due to newdata provided by the individual plan participant 18 or through thefacilitator 80. Additionally, the system monitor 96 aggregates and netsthe transactions between the investment allocations 26, 28, 30, 32, 34,and annuities and other mechanisms 36 and their underlying investments24.

The underlying investment vehicle(s) may simply deduct investmentadvisor fees from the vehicles 56, 58, 60, 62, 64, 66, 68, 70, 72, 74(by selling interests in it or otherwise) and provides such data to thesystem monitor 96. These fees are presently anticipated to be in theform of an hourly fee, a per capita fee, or an asset based fee or anycombination of the foregoing fees may be set by the program operatorbased on existing market conditions.

As shown in FIG. 4, the system monitor 96 gathers and processesindicative data 44 from the individual plan participant 18 accounts inthe savings plan 12; the investment vehicles and asset classes 24 usedto implement the discretionary allocation(s) 26, 28, 30, 32, 34 duringthe accumulation mode 14; the discretionary and non-discretionaryservices (including annuities and other mechanisms 36) during thedisbursement mode 16; and, in the case of Benefit Plans, aggregates theaccounts by separate and distinct Benefit Plans 100, 102, 104. In thecase of Benefit Plans, the total individual plan participant account ininvestment vehicles within that Benefit Plan, the system monitor 96 maycalculate and report to each Benefit Plan trustee, plan sponsor, orthird parties as appropriate the total individual plan participantaccount assets in each investment vehicle used to implement thediscretionary and non-discretionary allocation. Transactions may be“netted” and aggregated within each Benefit Plan 100, 102, 104 and thesystem monitor 96 may “net” and aggregates transactions across some orall Benefit Plans when required.

The system monitor 96 also may calculate and may report the expensesassociated with the investment program 10 for each individual planparticipant account assets 18, 18 a, 18 b, 18 c and, in aggregate, foreach Benefit Plan 100, 102, 104. The system monitor 96 may debit eachindividual plan participant account I₁, I₂, I₃, I_(N) for any expensesassociated with the investment program 10 due or reflects the reducedvalue of interests in the vehicle(s) in the individual plan participantaccounts I₁, I₂, I₃, I_(N). The system monitor 96 calculates and reportsany expenses associated with the investment program 10 paid by eachindividual plan participant account in the investment vehicles, by eachindividual plan participant I₁, I₂, I₃, I_(N) and by each Benefit Plan100, 102, 104.

The program 10 and the system monitor 96 (See FIG. 4) generally insulateany person (e.g., money managers 142 and financial intermediaries 144)who receives variable fees and profits, depending on the services 12,14, 16 provided from the Independent Expert 38 and its fees, and thefacilitators, and their compensation by maintaining separate systems ofcompensation that is memorialized in the system monitor. This insulationand separation removes or substantially reduces any economic or profitincentive on the part of persons who are in a position to actuallyaffect individual plan participants or Investor 18 decisions or todirect individual plan participants 18 to invest in a manner thatgenerates higher fees and/or profits that may be inappropriate for theindividual plan participant 18 but more profitable to persons whoreceive variable fees and profits, depending on the allocation(including whether or not an annuity is selected) or the amount of thefunds invested such as a typical money manager. The computer programutilized by the system monitor, in its initial form, will be initiallydesigned and constantly updated to follow and adhere to the safeguardsand conditions designed to mitigate or eliminate overreaching byperson(s) who receives variable fees and profits, depending on theallocation (including whether or not an annuity is selected) or theamount of the funds invested, including, where appropriate thosecontained or implicit in ERISA, as well as other regulatory constraintsand requirements.

This insulation and separation removes or substantially reduces anyeconomic or profit incentive on the part of persons who are in aposition to actually affect individual plan participants or Investor 18decisions or to direct individual plan participants 18 to invest in amanner that generates higher fees and/or profits that may beinappropriate for the individual plan participant or Investor 18 butmore profitable to persons who receive variable fees and profits,depending on the allocation (including whether or not an annuity isselected) or the amount of the funds invested such as a typical moneymanager. The computer program utilized by the system monitor, in itsinitial form, will be initially designed and constantly updated tofollow and adhere to the safeguards and conditions designed to mitigateor eliminate overreaching by person(s) who receives variable fees andprofits, depending on the allocation (including whether or not anannuity is selected) or the amount of the funds invested, including,where appropriate those contained or implicit in ERISA, as well as otherregulatory constraints and requirements.

As illustrated in FIG. 5, the investment allocation portion of theinvestment program 10, which includes the systems and methods of thepresent disclosure, may require certain computer hardware, including butnot limited to, a mainframe computer or server(s) 106 for processinglarge volumes of data stored in a data storage unit 108 and acommunications system, including, but not limited to, intranet, internet112, and other communication vehicles, as is known to those skilled inthe art. The stored data is taken from data provided by the individualplan participant 18 or third parties, as described above. A personalcomputer or workstation 118 having a hard drive or other storage device,an input device such as a keyboard 120 and mouse 122, and an outputdevice such as a display 124 and printer 126 are operatively connectedto the computer 118, as is known to those skilled in the art. Theprogram operator's 22 computer 140 may be used to communicate with andmonitor the individual participant's 18 computer 118, as is known tothose skilled in the art. In particular, computer programs used toimplement asset allocation services 50, 90, 92 and the programs used toimplement the savings services 12 loaded on the application servers 108are accessed by, or on behalf of, the program operator 22 and used totransmit under the investment program 10 in a tangible form, to eachinvestor 18, including participants in Benefit Plans, as is known tothose skilled in the art.

The present investment program 10 includes a unique data processingsystem that, among other things, automatically enrolls new employees andnon-participating employees in Benefit plans (e.g., 401(k), 403(b),457), and otherwise and moves individuals into appropriate contributionrates and appropriate investment allocations over time, unless theindividual plan participant (where applicable) opts out of the savingsplan, the contribution method, or the allocation method. In doing so,the present program is successful in turning the win/lose propositionnormally associated with automatic enrollment into a win/win propositionfor all the interested constituencies, especially the plan participants.

The present investment program 10 also enables the automation of theprocess of selecting investment vehicles. By reducing the steps in theinvestment vehicle selection process (how much is up to the client) theinvestment vehicle selection process becomes more cost effective,efficient, and assists all persons involved in complying with applicablelaws and regulations.

The present investment program 10 uniquely serves the interests ofIndividual Investors 18 including plan participants, as well asemployers 150 who sponsor Benefit Plans. Individual plan participants 18will benefit by taking what is otherwise a complex set of decisions andreducing them to an automatic procedure, which, if simply adhered to, isbelieved to materially increase each plan participant' probable return,including their probable retirement income. The present investmentprogram 10 will also benefit plan sponsors in that the investmentprogram 10 will reduce their risk of liability by allocating assets ineach plan participant's account based on: 1) the information availableabout each plan participant; 2) pursuant to prudent procedures; and 3)based on the formulae developed or approved and implemented in variouscomputer programs, by a respected Independent Financial Expert, whosequalifications may have been reviewed by the United States Department ofLabor (the “Department”).

The results derived from the implementation of the investment program 10are believed clearly superior to the one size fits all approach normallyused in automatic enrollment procedures, and the emphasis on investmentvehicles, and their recent performance, currently used in themarketplace. It is also believed that the investment program 10,particularly if coupled with a finding by the Department that theprocedures are permitted under ERISA, will materially reduce the risk ofplan sponsors who decide to use any of the mechanisms outlined above,including “negative election” mechanisms outlined above. Further, theresults derived from the implementation of the investment program 10 arebelieved to permit the money managers (and other financialintermediaries) to control their clients by providing the most importantservices relative to achieving financial goals without engaging intransactions that could be considered prohibited self dealing underERISA.

Another aspect of the present investment program 10 arises from placinginvestment vehicles in their proper perspective. Selection of a limiteduniverse of investment alternatives in an employer-sponsored participantdirected account plan is typically the responsibility of the sponsoringemployer (who acts as a fiduciary when selecting or monitoring suchalternatives). The fiduciaries, including the plan sponsor may then beprovided fiduciary relief under section 404(c) of ERISA for theallocation decisions when a participant makes an affirmative election toinvest from among the vehicles. If a vehicle becomes inappropriate, andneeds to be replaced, there is no affirmative election with regard tothe replacement vehicle. This could cause the relief that is otherwiseavailable to become unavailable due to the absence of any affirmativeelection. An element of the present investment program 10, by placinginvestment alternatives in their proper perspective, addresses thisproblem. Instead of electing an investment in a particular vehicle,participants can elect in an alternative that are instead described moregenerically (e.g., the mixture of asset classes designed for theparticipant's circumstances). This investment alternative enables thefiduciary (in the case of a benefit plan) to change investment vehicleswithout obtaining an additional affirmative election from individualplan participants, while continuing to enjoy relief for an Individualplan participant's asset allocation decisions.

By placing investment vehicles in their proper perspective, it is alsobelieved that an investor 18, or a person acting on behalf of aninvestor 20, will be better enabled to make a single election regardingthe allocation of a particular investors assets because it is believedthat the vehicles can be changed by the decision of a third party actingon behalf of an investor, up to an including through retirement. Ifthere is no plan fiduciary that makes the decision, this decision can bemade or approved by another independent person such as the IndependentExpert 38.

In the alternative, the initial positive election can include aformulaic method (e.g., select the investment vehicle(s) 24 with thelowest fees that can accomplish the objective of the Investment Program10, from those available under the Investment Program 10) for selectingalternative vehicles or circumscribing the discretion of the persons whoselect the investment vehicles. For example, when a participant electsto receive a rollover distribution of his or her retirement benefitsfrom an employer-sponsored 401(k) plan, the investment vehicles in aplan may no longer be available. At that point in time, the presentinvestment program 10 permits the assets in the disbursement mode to beallocated (and ultimately distributed) automatically in replacementvehicles, such an IRA or other account, which IRA and vehicles areselected on a basis that was disclosed and agreed to, by the individualplan participant or a person acting on behalf of the investor, at thetime of the initial election, or at any subsequent time. This enables afinancial institution or other financial intermediaries to retain theirrelationships with their clients on the basis of providing value-addedservices in a manner that addresses possible conflicts of interest, andfor investors to continue receiving such value-added services up to andthrough retirement while minimizing or eliminating additionalinvolvement and/or decisions by the individual plan participant

Changes and modifications in the specifically described representativeembodiments can be carried out without departing from the scope of thedisclosure which is intended to be limited only by the scope of theappended claims.

1. A method for automatically reallocating funds within a retirementinvestor's investment vehicle, comprising the steps of: providingautomatic enrollment of the retirement investor in a retirement plan,and storing personal information corresponding to the retirementinvestor in a computerized database; providing by a computer theretirement investor with a choice to opt out of the retirement plan;deducting funds automatically from the pay of the retirement investor,and automatically placing those deducted funds in the retirementinvestor's investment vehicle associated with the retirement plan; usingat least one a computer to automatically reallocate funds within theretirement investor's investment vehicle, in response to a change of ageof the retirement investor; and providing the retirement investor achoice to opt out of automatic reallocation of funds within theretirement investor's investment vehicle, in response to a change of ageof the retirement investor.
 2. The method according to claim 1, furthercomprising the step of using the at least one computer to automaticallyreallocate funds within the retirement investor's investment vehicle inresponse to a change in the retirement investor's employment status. 3.The method according to claim 1, further comprising the step of usingthe at least one computer to automatically reallocate funds within theretirement investor's investment vehicle in response to a change in theretirement investor's salary.
 4. The method according to claim 1,further comprising the step of using the at least one computer toautomatically reallocate funds within the retirement investor'sinvestment vehicle in response to a change in the retirement investor'sage combined with a change in date.
 5. The method according to claim 1,wherein the retirement plan comprises an employer-sponsored benefitplan.
 6. The method according to claim 1, further comprising the step ofmaking an initial allocation of funds into the retirement investor'sinvestment vehicle, wherein the initial allocation is based, at least inpart, on the age of the retirement investor.
 7. The method according toclaim 1, wherein the retirement plan comprises a tax-deferred retirementplan.
 8. The method according to claim 1, wherein the automaticenrollment step is performed in response to the retirement investorbecoming employed.
 9. The method according to claim 1, furthercomprising the step of automatically increasing the percentage of paydeducted from the pay of the retirement investor.
 10. The methodaccording to claim 9, wherein the automatic increase in the percentageof pay deducted from the pay of the retirement investor is made inaccordance with a change in the age of the retirement investor.
 11. Themethod according to claim 1, wherein at least one periodic increase inthe percentage of pay deducted from the pay of the retirement investoris made in accordance with an increase in the pay of at least oneinvestor.
 12. The method according to claim 1, wherein the automaticreallocation step is performed by computer software that is created,approved, or maintained by one or more individuals who are substantiallyindependent of fee generating functions of the investment vehicle. 13.The method according to claim 1, further comprising the step ofcoordinating the reallocation with savings plan services for theretirement investor.
 14. The method according to claim 13, furthercomprising the step of providing to the retirement investor adviceconcerning the savings plan services.
 15. The method according to claim14, wherein the provided advice is based, at least in part, onadditional computer software.
 16. The method according to claim 15,wherein the additional computer software is created, approved, ormaintained by one or more individuals who are substantially independentof fee generating functions of the investment vehicle.
 17. The methodaccording to claim 1, wherein the automatic deducting step and theautomatic reallocation step are implemented by computer software that isdeveloped or maintained or approved by at least one person who issubstantially independent of at least one conflicted person who isinvolved with the investment vehicle.
 18. The method according to claim1, further comprising the step of providing the retirement investor achoice to opt out of automatic reallocation of funds within theretirement investor's investment vehicle, in response to a change in ageof the retirement investor.
 19. A computer-implemented system apparatusfor automatically reallocating funds within a retirement investor'sinvestment vehicle, comprising: first computer software configured tocause at least one computer to provide providing automatic enrollment ofthe retirement investor in a retirement plan, said first computersoftware also configured to cause the at least one computer to provideproviding the retirement investor with a choice to opt out of theretirement plan; second computer software configured to cause the atleast one computer to automatically deduct deducting funds from the payof the retirement investor and automatically place placing thosededucted funds in a corresponding investment vehicle associated with theretirement plan; third computer software configured to cause the atleast one computer to automatically reallocate reallocating funds withinthe retirement investor's investment vehicle, in response to a change ofage of the retirement investor; and Third computer software alsoconfigured to cause at least one computer to provide the retirementinvestor a choice to opt out of automatic reallocation of funds inresponse to a change of age of the retirement investor.
 20. The systemapparatus according to claim 19, wherein the third computer software isconfigured to cause the at least one computer to automaticallyreallocate funds within the retirement investor's investment vehicle, inresponse to a change in the retirement investor's employment status. 21.The system apparatus according to claim 19, wherein the third computersoftware is configured to cause the at least one computer toautomatically reallocate reallocates funds within the retirementinvestor's investment vehicle, in response to a change in the retirementinvestor's salary.
 22. The system apparatus according to claim 19,wherein the third computer software is configured to cause the at leastone computer to automatically reallocate funds within the retirementinvestor's investment vehicle, in response to a change in the retirementinvestor's age combined with a change in date.
 23. The system apparatusaccording to claim 19, wherein the retirement plan comprises anemployer-sponsored benefit plan.
 24. The system apparatus according toclaim 19, further comprising fourth computer software configured tocause the at least one computer to make making an initial allocation offunds into the retirement investor's investment vehicle, wherein theinitial allocation is based, at least in part, on the age of theretirement investor.
 25. The system apparatus according to claim 19,wherein the retirement plan comprises a tax-deferred retirement plan.26. The system apparatus according to claim 19, wherein the automaticenrollment is performed in response to the retirement investor becomingemployed.
 27. The system apparatus according to claim 19, furthercomprising additional computer software configured to cause the at leastone computer to automatically increase increasing the percentage offunds deducted from the pay of the retirement investor.
 28. The systemapparatus according to claim 27, wherein the automatic increase in thepercentage of funds deducted from the pay of the retirement investor ismade in accordance with a change in the age of the retirement investor.29. The system apparatus according to claim 19, wherein at least oneperiodic increase in the percentage of pay deducted from the pay of theretirement investor is made in accordance with an increase in the pay ofthe retirement investor.
 30. The system apparatus according to claim 19,wherein the third computer software that is created, approved, ormaintained by one or more individuals who are substantially independentof fee generating functions of the investment vehicle.
 31. The systemapparatus according to claim 19, further comprising supplementalcomputer software configured to cause the at least one computer tocoordinate coordinating the reallocation with savings plan services forthe retirement investor.
 32. The system apparatus according to claim 31,further comprising supplementary computer software configured to causethe at least one computer to provide providing to the retirementinvestor advice concerning the savings plan services.
 33. The systemapparatus according to claim 32, wherein the provided advice is based,at least in part, on the age of the retirement investor auxiliarycomputer software.
 34. The system apparatus according to claim 19,wherein the second computer software and the third computer software areautomatic deducting and automatic reallocation computer software isdeveloped or maintained or approved by at least one person who issubstantially independent of at least one conflicted person who isinvolved with the investment vehicle.
 35. A system for automaticallyreallocating funds within a retirement investor's investment vehicle,said system comprising at least one computer having code which causesthe at least one computer to: automatically enroll the retirementinvestor in a retirement plan, and provide the retirement investor achoice to opt out of the retirement plan; automatically deduct fundsfrom the pay of the retirement investor and automatically place placingthose deducted funds in a corresponding investment vehicle associatedwith the retirement plan; automatically reallocate funds within theretirement investor's investment vehicle, in response to a change of ageof the retirement investor; and provide the retirement investor a choiceto opt out of reallocation of funds in response to a change of age ofthe retirement investor.
 36. The system according to claim 35, whereinthe at least one computer has code which causes the at least onecomputer to the third processing structure automatically reallocatefunds within the retirement investor's investment vehicle in response toa change in the retirement investor's employment status.
 37. The systemaccording to claim 35, wherein the at least one computer has code whichcauses the at least one computer to automatically reallocate reallocatesfunds within the retirement investor's investment vehicle in response toa change in the retirement investor's salary.
 38. The system accordingto claim 35, wherein the retirement plan comprises an employer-sponsoredbenefit plan.
 39. The system according to claim 35, wherein the at leastone computer has code which causes the at least one computer to makefurther comprising fourth processing structure for making an initialallocation of funds into the retirement investor's investment vehicle,wherein the initial allocation is based, at least in part, on the age ofthe retirement investor.
 40. The system according to claim 35, whereinthe retirement plan comprises a tax-deferred retirement plan.
 41. Thesystem according to claim 35, wherein the at least one computer has codewhich causes the at least one computer to perform the first processingstructure performs the automatic enrollment in response to theretirement investor becoming employed.
 42. The system according to claim35, wherein the at least one computer has code which causes the at leastone computer to the automatically increase the percentage of paydeducted from the pay of the retirement investor.
 43. The systemaccording to claim 42, wherein the at least one computer has code whichcauses the at least one computer to the automatically increase increasesthe percentage of pay deducted from the pay of the retirement investorin accordance with a change in the age of the retirement investor. 44.The system according to claim 35, wherein the at least one computer hascode which causes the at least one computer to perform the secondprocessing structure performs at least one periodic increase in thepercentage of pay deducted from the pay of the retirement investor inresponse to an increase in the pay of at least one investor.
 45. Thesystem according to claim 35, wherein the code which causes the at leastone computer to automatically reallocate funds is created, approved, ormaintained by one or more individuals who are substantially independentof fee generating functions of the investment vehicles.
 46. The systemaccording to claim 35, wherein the at least one computer has code whichcauses the at least one computer to further coordinate the reallocationwith savings plan services for the retirement investor.
 47. The systemaccording to claim 46, wherein the at least one computer has code whichcauses the at least one computer to further provide to the retirementinvestor advice concerning the savings plan services.
 48. The systemaccording to claim 35, wherein the code which causes the at least onecomputer to automatically deduct funds and automatically reallocatefunds the second and third processing structures utilize computersoftware that is developed or maintained or approved or certified by atleast one person who is substantially independent of at least oneconflicted person who is involved with the investment vehicle.
 49. Asystem for automatically reallocating retirement funds of a retirementinvestor, the system comprising at least one computer configured tocause: for the retirement investor to be automatically enrolledenrolling the retirement investor in a retirement plan, and said toprovide the retirement investor with a choice to opt out of theretirement plan; for funds to be automatically deducted deducting fundsfrom the pay of the retirement investor, and to automatically placeplacing those deducted funds in a corresponding investment vehicleassociated with the retirement plan; and automatic reallocation of theplaced funds within at least one of (i) the retirement investor'sinvestment account, and (ii) the retirement investor's investmentvehicle, in response to a change of the retirement investor's age.